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CLH President Chuck Hembree and host, Grant Finley, look back at the changes in the insurance industry following the terror attacks of September 11, 2001 and discuss evolving forms of insurance for your security.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the topics discussed in the episode, see the links at the bottom of this post.

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Grant FINLEY: Welcome to another edition of Your Insurance Connection Podcast. I'm your host, Grant Finley and I'm joined again today by the President of CLH Insurance, Chuck Hembree. Chuck, thanks for joining us today.

Chuck HEMBREE: Grant, thanks again. This has been fun.

FINLEY: So, Chuck, we're coming up on the 15th anniversary of 9/11. Obviously a very terrible day in this nation's history and it certainly changed the world in many aspects. Something I think people have figured out as time has progressed is that you just don't know what's going to happen and things could change in the blink of an eye. There's always that question of security and so I guess my first question would be - let's take a look back at 9/11 and how that, in your perception, changed the industry. What kinds of things came from that event that completely changed the way in the insurance industry does business?

HEMBREE: Well, Grant, I don't know if you or our listeners remember, but I can remember exactly where I was at that time. I was getting ready to leave for work and see my youngest daughter off to school - get ready for the bus, and it came across the television and I remember telling her "You're going to be talking about this at school today." Of course, was that an understatement at that time. I didn't know how much we were going to be impacted by this thing. That's where we really started to coin the word "terrorism" in a way that we had never thought about it before in the United States. But from an industry perspective it really took us aback because war and terrorism have always been excluded in any policy that's ever been written, anywhere in the world. Because it's not an accident, it's intentional. Insurance is to take care of accidents so it was a less used term then, terrorism and we excluded it from coverage. But insurance companies recognized that they needed to respond on behalf of the U.S. The U.S. is where we live, we gain - we have our "being" is because of clients in the United States and so when we looked at the Twin Towers, when we looked at the Pentagon, when we looked at aviation insurance and what happened in Pennsylvania. Insurance industry knew that they needed to step up and we needed to re-think so we didn't exclude coverage. We covered every one of those risks that you saw out there even though the policy said we shouldn't because we knew it was in the best interest of the nation and that was a smart move. Out of that though, the government needed to sit down with insurance because there was great concern, you know, how many times could we take this type of situation because we've always excluded it? So, although we're taking care of it now, what does that mean for the future? Out of it came a federal government program called TRIA, Terrorism Retention [Risk] and Insurance Act and it was an agreement with the government that even though the policy excluded terrorism, there was an agreement that insurance much offer terrorism. The insurance industry has to insure terrorist acts. But we will pick up a greater percentage than we're asking you to shoulder. But over time, we need to walk though this so we protect the nation from these types of acts. Otherwise, it does become a terrorist activity - there's no security, there's no safety, we have no control. Insurance is a big part of providing that peace of mind.

FINLEY: So is that a specific policy then, or is it rolled into some other ones? How does that work?

HEMBREE: Well you'll see it on all policies. There will actually be a terrorism charge on there. You see it more with commercial insurance than you see it with personal insurance but it applies just the same, and it says that insurance companies cannot exclude terrorist acts. We have to pick it up and it even goes so far to say that we have to give the public a chance to reject it so if they don't want to pay that extra charge, they don't have to. But even in cases where they reject the terrorism, if it results in a covered peril, like fire, if somebody would throw a Molotov cocktail and a cause a fire, that's normally a covered peril anyway, even if an insured decides they want to reject terrorism, not pay it, they will have coverage for that covered peril. So, insurance companies had to really think through this and how they set their reserves and so forth so they could remain viable in the insurance industry.

FINLEY: So, now, what about - technology is getting further and further advanced, what about something like cyber terrorism? What's going on in the industry to keep up with - I don't know if you could call it "over-the-counter or regular terrorism, but what is the industry doing to try to keep up with the evolving problems out there, if you will?

HEMBREE: Well, that has really been an evolving situation and you're seeing that type of coverage come out of this. That was the purpose years ago when the principal of insurance was being developed. Protect the unexpected accidents in life so we don't have to be so fearful of their consequences. We needed to find ways to transfer that risk, and that's what insurance is about. We're taking the risk that all of us have and we transfer it, in this case, to an insurance company for a specific amount of money. We know what that is and we can have some peace in - none of us like to pay an insurance premium, but at least we know what that premium is and we can say that above that this is how we're going to be protected. So, let's think about things like cyber liability. That's a big catchphrase right now and it's a big impact upon the insurance industry. All around us we see the Targets, the Home Depots, the large accounts that have been hacked and have resulted in compromised security and compromised private information of insureds. So cyber liability was never something we looked at in the past, it's another form of maybe domestic or foreign terrorism, but we're having to address that and so we've seen cyber liability policies come into place and what they're doing that wasn't there before is when you looked at insurance definitions, electronic or computer or any kind of cyber liability was never a peril that we insured against. So we had to create new products to cover these new threats that the insurance industry never thought about, was never built into their structure because we never thought we'd have to deal with it, but now we do and so we've defined electronics, this intangible thing, in our policies now so that we can provide coverage. But we've also had to think about other ways to protect them too, like ID theft. Almost every homeowners policy has the ability to add ID theft. It doesn't prevent (theft but it does) help clean up afterwards. Same way as it doesn't prevent a hail or tornado hitting your house, but after it happens we're going to step in, clean up the mess and get you back to where you were before the accident. So cyber liability and ID theft are two really good examples of how we've had to respond to terrorism, to the security threats that we've had and the evolving threats that come to our insureds in the U.S.

FINLEY: OK, very interesting and it seems to me that it's just going to continue to evolve going forward. You get in front of the terrorists and criminals and then they're coming up with something that's just going to keep pushing the envelope further and further, so I imagine this is not a - it doesn't have a set endpoint, it's just going to keep going on, the line's going to keep moving forward it sounds like.

HEMBREE: Yeah, if there's any optimistic viewpoint out of this, is we become better and better at handling it. And one thing with insurance is, the cost of insurance is a known. The cost of not having insurance is not known and we may not like to pay out of our hard worked earnings for insurance but it does provide a sense of security that's really worth it and helps us sleep at night.

FINLEY: Couldn't have said it better. Chuck, thanks again for joining us. I think that's going to do it for edition.

HEMBREE: Thank you.

Your Insurance Connection podcast can be heard on iTunes and Stitcher or by visiting If you like what you’ve heard you can support this podcast by rating and/or sharing it on your social platforms. CLH Insurance is a “Trusted Choice”, independent agency servicing Missouri, Kansas and Illinois. For more information on CLH Insurance, visit or call 636.391.0700 to speak with an agent. Until we connect again, thanks for listening.

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Show Notes - Where you can learn more about the people and ideas discussed in this episode.

TRIA - Terrorism Risk Insurance Act

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